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Oracle® Fusion Applications Financials Implementation Guide
11g Release 1 (11.1.2)
Part Number E20375-02
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34 Manage Intercompany Balancing Rules and Ledger Balancing Options

This chapter contains the following:

Manage Intercompany Balancing Rules

Manage Ledger Balancing Options

Manage Intercompany Balancing Rules

Intercompany Balancing Rules: Explained

Intercompany balancing rules are used to generate the accounts needed to balance journals that are out of balance by legal entity or primary balancing segment values.

You specify the intercompany receivables and intercompany payables accounts you want to use. The intercompany balancing feature then uses these rules to generate the accounts of the balancing lines it creates.

Defining Intercompany Balancing Rules

You can define intercompany balancing rules at the following rule levels:

  1. Primary balancing segment

  2. Legal entity

  3. Ledger

  4. Chart of accounts

The rules are evaluated in the order shown above. For example, you can define a Primary Balancing Segment rule and a Legal Entity level rule. If both rules are used to balance a particular journal, the Primary Balancing Segment rule is used, as it has a higher precedence.

You have flexibility in defining your intercompany balancing rules. You can have a simple setup in which you define one rule for your chart of accounts. This rule is used for all intercompany balancing for all ledgers that use this chart of accounts. Alternatively, you can have a more granular set of rules. For example, you can define a different rule for each legal entity and one chart of accounts rule to cover any gaps in your rule definitions. You can gain even more granularity by defining rules for specific journal and/or category combinations or intercompany transaction types.

Intercompany Balancing Rules: Examples

This topic provides examples of intercompany balancing rules and the intercompany balancing lines generated. These rules are used to generate the accounts needed to balance journals that are out of balance by legal entity or primary balancing segment values.

Scenario

Simple Chart of Accounts

In this scenario the enterprise has one chart of accounts for all its ledgers. The chart of accounts has an intercompany segment. They are using this intercompany segment and the company segment to identify the intercompany trading partners for each transaction. They do not have a need to track their intercompany activity at a granular level such as by journal source and journal category or by intercompany transaction type.

Setup


Segment Qualifier

Primary Balancing Segment

Second Balancing Segment

Third Balancing Segment

Account

Intercompany Segment

Segment Name

Company

(CO)

Cost Center

(CC)

Product

(PROD)

Account

(ACCT)

Intercompany

(IC)


Ledger

Legal Entity

Primary Balancing Segment Value

InFusion USA

InFusion Farms

3100, 3200, 3300, 3400, 3500

InFusion USA

InFusion Textiles

4000

InFusion USA

InFusion Products (East)

5000

InFusion USA

InFusion Products (West)

6000

InFusion USA

 

1000, 9000


Rule Number

Chart of Accounts

AR Account

AP Account

Source

Category

Transaction Type

1

InFusion USA Chart of Accounts

1000 - 000 - 0000 - 13010 - 0000

1000 - 000 - 0000 - 21010 - 0000

Other

Other

None


Line

Line Type

Legal Entity

CO

CC

PROD

ACCT

IC

Debit

Credit

1

Expense

InFusion Farms

3100

100

1200

52330

0000

150

 

2

Liability

InFusion Textiles

4000

500

1300

40118

0000

 

150


Uses Rule

Line

Line Type

Legal Entity

Company

Cost Center

Product

Account

Intercompany

Debit

Credit

 

1

Expense

InFusion Farms

3100

100

1200

52330

0000

150

 

 

2

Liability

InFusion Textiles

4000

500

1300

40118

0000

 

150

1

3

IC AP

InFusion Farms

3100

100

1200

21010

4000

 

150

1

4

IC AR

InFusion Textiles

4000

500

1300

13010

3100

150

 

Scenario

Legal Entity and Chart of Accounts Rules

In this example the legal Entity InFusion Textiles intercompany manufacturing activities are tracked separately from its non-manufacturing activities. In order to achieve this legal entity level rules are defined specifically between the legal entity InFusion Textiles and the two manufacturing legal entities, InFusion Products (East) and InFusion Products (West). A chart of accounts rule is created to cover all other intercompany activities.

Setup


Segment Qualifier

Primary Balancing Segment

Second Balancing Segment

Third Balancing Segment

Account

Intercompany Segment

Segment Name

Company

Cost Center

Product

Account

Intercompany


Ledger

Legal Entity

Primary Balancing Segment Value

InFusion USA

InFusion Farms

3100, 3200, 3300, 3400, 3500

InFusion USA

InFusion Textiles

4000

InFusion USA

InFusion Products (East)

5000

InFusion USA

InFusion Products (West)

6000

InFusion USA

 

1000, 9000


Rule Number

Chart of Accounts

AR Account

AP Account

Source

Category

Transaction Type

2

InFusion USA Chart of Accounts

1000 - 000 - 0000 - 13050 - 0000

1000 - 000 - 0000 - 21050 - 0000

Other

Other

None


Rule No.

From Legal Entity

To Legal Entity

AR Account

AP Account

Source

Category

Transaction Type

3

InFusion Textiles

InFusion Products (West)

1000 - 000 - 0000 - 13020 - 0000

1000 - 000 - 0000 - 21020 - 0000

Other

Other

None

4

InFusion Textiles

InFusion Products (East)

1000 - 000 - 0000 - 13030 - 0000

1000 - 000 - 0000 - 21030 - 0000

Other

Other

None


Line

Line Type

Legal Entity

CO

CC

PROD

ACCT

IC

Debit

Credit

1

Expense

InFusion Farms

3100

100

1200

52330

0000

150

 

2

Expense

InFusion Products (East)

5000

100

1200

52340

0000

200

 

3

Expense

InFusion Products (West)

6000

200

1300

52345

0000

300

 

4

Liability

InFusion Textiles

4000

500

1300

40118

0000

 

650


Uses Rule

Line

Line Type

Legal Entity

CO

CC

PROD

ACCT

IC

Debit

Credit

 

1

Expense

InFusion Farms

3100

100

1200

52330

0000

150

 

 

2

Expense

InFusionProducts (East)

5000

100

1200

52340

0000

200

 

 

3

Expense

InFusionProducts (West)

6000

200

1300

52345

0000

300

 

 

4

Liability

InFusion Textiles

4000

500

1300

40118

0000

 

650

2

5

IC AR

InFusion Textiles

4000

500

1300

13050

3100

150

 

2

6

IC AP

InFusion Farms

3100

100

1200

21050

4000

 

150

4

7

IC AR

InFusion Textiles

4000

500

1300

13030

5000

200

 

2

8

IC AP

InFusionProducts(East)

5000

100

1200

21050

4000

 

200

3

9

IC AR

InFusion Textiles

4000

500

1300

13020

6000

300

 

2

10

IC AP

InFusionProducts (West)

6000

200

1300

21050

4000

 

300

Manage Ledger Balancing Options

Defining Ledger Balancing Options: Explained

Ledger balancing options are defined for the ledger to balance the second balancing segment and/or the third balancing segment, when a transaction is unbalanced by one of these segments.

Ledger balancing options include the following settings:

Receivables and Payables Accounts used for Ledger Balancing

You can choose to specify the receivables and payables accounts to be used, if your chart of accounts has the second balancing segment and/or the third balancing segment enabled. These accounts are used for the balancing lines generated when a journal is balanced by its primary balancing segment values but is not balanced by its second balancing segment and/or third balancing segment.

Summarization Options

You can choose to summarize balancing lines generated for a primary balancing segment out of balance scenario, where all the primary balancing segment values are assigned to the same legal entity. You do this by specifying the Summarization option of Summary Net or Detail. You can choose to summarize by primary balancing segment value or alternatively have individual balancing lines (that have not been summarized) generated. Note that summarization always applies to balancing lines generated in a cross legal entity scenario.

Clearing Company Options

You can choose to set clearing company options to balance a journal with different primary balancing segment values that all belong to a single legal entity. Set the following options to handle your clearing company balancing.

Defining Ledger Balancing Options: Examples

This topic provides examples of ledger balancing options, the setup required, and the journal before and after balancing.

Scenario

Simple ledger balancing option with no clearing company options

In this scenario the enterprise has the second balancing segment and the third balancing segment enabled for its chart of accounts. The journal is balanced by primary balancing segment but is out of balance by the second balancing segment and the third balancing segment.

Setup


Segment Qualifier

Primary Balancing Segment

Second Balancing Segment

Third Balancing Segment

Account

Intercompany Segment

Segment Name

Company

CO

Cost Center

CC

Product

PROD

Account

ACCT

Intercompany

IC


Ledger

Legal Entity

Primary Balancing Segment Value

InFusion USA

InFusion Farms

3100, 3200, 3300, 3400, 3500

InFusion USA

InFusion Textiles

4000

InFusion USA

InFusion Products (East)

5000

InFusion USA

InFusion Products (West)

6000

InFusion USA

 

1000, 9000


Rule Number

Ledger

Source

Category

Transaction Type

AR Account

AP Account

1

InFusion USA

Other

Other

None

1000 - 000 - 0000 - 13010 - 0000

1000 - 000 - 0000 - 21010 - 0000


Line

Line Type

Legal Entity

CO

CC

PROD

ACCT

IC

Debit

Credit

1

Expense

InFusion Farms

3100

100

1200

52330

0000

150

 

2

Liability

InFusion Farms

3100

500

1300

40118

0000

 

150


Uses Rule

Line

Line Type

Legal Entity

CO

CC

PROD

ACCT

IC

Debit

Credit

 

1

Expense

InFusion Farms

3100

100

1200

52330

0000

150

 

 

2

Liability

InFusion Farms

3100

500

1300

40118

0000

 

150

1

3

AP

InFusion Farms

3100

100

1200

21010

0000

 

150

1

4

AR

InFusion Farms

3100

500

1300

13010

0000

150

 

Scenario

Ledger balancing options with detail summarization and clearing company options set

In this scenario the enterprise has the second balancing segment and the third balancing segment enabled for its chart of accounts. Management has decided to use a clearing company for balancing Many-to-Many journals only. Since the primary balancing segment values in the journal are out of balance intercompany balancing is required. Additionally since clearing company options have been specified they will be used to balance the journal. Note that if the primary balancing segment values were balanced and only the second balancing segment and the third balancing segment were out of balance, the clearing company options would not be used.

Setup


Segment Qualifier

Primary Balancing Segment

Second Balancing Segment

Third Balancing Segment

Intercompany Segment

Segment Name

Company

Cost Center

Product

Account

Intercompany


Ledger

Legal Entity

Primary Balancing Segment Value

InFusion USA

InFusion Farms

3100, 3200, 3300, 3400, 3500

InFusion USA

InFusion Textiles

4000

InFusion USA

InFusion Products (East)

5000

InFusion USA

InFusion Products (West)

6000

InFusion USA

 

1000, 9000


Rule Number

Chart of Accounts

AR Account

AP Account

Source

Category

Transaction Type

1

InFusion USA Chart of Accounts

1000 - 000 - 0000 - 13050 - 0000

1000 - 000 - 0000 - 21050 - 0000

Other

Other

None


Rule Number

Ledger

Source

Category

Transaction Type

AR Account

AP Account

2

InFusion USA

Other

Other

None

1000 - 000 - 0000 - 13010 - 0000

1000 - 000 - 0000 - 21010 - 0000


Rule Number

Ledger

Source

Category

Transaction Type

Condition

Source

Value

2

InFusion USA

Other

Other

None

Use for many-to-many journals only

Default clearing balancing segment value

9000

Note

The Ledger Balancing Options and Clearing Company Options appear as one line on the form.


Line

Line Type

Legal Entity

CO

CC

PROD

ACCT

IC

Debit

Credit

1

Expense

InFusion Farms

3100

100

1200

52330

0000

150

 

2

Expense

InFusion Farms

3100

300

1200

52340

0000

200

 

3

Expense

InFusion Farms

3300

200

1300

52345

0000

300

 

4

Liability

InFusion Farms

3400

500

1300

40118

0000

 

320

5

Liability

InFusion Farms

3500

600

1400

40112

0000

 

330


Uses Rule

Line

Line Type

Legal Entity

CO

CC

PROD

ACCT

IC

Debit

Credit

 

1

Expense

InFusion Farms

3100

100

1200

52330

0000

150

 

 

2

Expense

InFusion Farms

3100

300

1200

52340

0000

200

 

 

3

Expense

InFusion Farms

3300

200

1300

52345

0000

300

 

 

4

Liability

InFusion Farms

3400

500

1300

40118

0000

 

320

 

5

Liability

InFusion Farms

3500

600

1400

40112

0000

 

330

1

6

IC AR

 

9000

000

0000

13050

3100

150

 

1

7

IC AP

 

3100

100

1200

21050

9000

 

150

1

8

IC AR

 

9000

000

0000

13050

3100

200

 

1

9

IC AP

 

3100

300

1200

21050

9000

 

200

1

10

IC AR

 

9000

000

0000

13050

3300

300

 

1

11

IC AP

 

3300

200

1300

21050

9000

 

300

1

12

IC AR

 

3400

200

1300

13050

9000

320

 

1

13

IC AP

 

9000

000

000

21050

3400

 

320

1

14

IC AR

 

3500

600

1400

13050

9000

330

 

1

15

IC AP

 

9000

000

000

21050

3500

 

330